RE:  Santa Monica Earthquake Retrofit

(To Senator Ben Allen)

Dear Scheduler:

The apartment industry has excellent lobbyists.  However, over the last several years or longer, there have been several instances of “injustices” or perhaps mere inadvertent oversights.

A few years ago, the State Legislature passed a new law mandating or requiring that all apartment owners install very expensive “carbon monoxide” type appliances.  In time, the appliances were integrated into a single appliance involving both a smoke alarm and carbon monoxide device.  However, the State Legislature failed to include a simple provision wherein the costs would be passed through to the tenants.

As you will agree, the carbon monoxide device provides a safety feature only for the occupant.  It detects the dangerous gases and initiates an alarm system to warn the tenant so that he or she can leave the premises and thereafter contact the owner to investigate the problem and make necessary repairs.  The carbon monoxide device provided no direct or indirect benefit accruing to the owner.  Yet Berkeley, West Hollywood, Santa Monica and Los Angeles never adopted a protocol wherein the costs could be ascertained and passed through to the tenants.

Earthquake Retrofit

The seismic retrofit program to be adopted in Santa Monica also is going to be overseen by the municipal authorities and there is a likelihood that the enormous costs are going to be the responsibility of only the owners.

Cal Tech earthquake expert/engineer Lucy Jones indicated that it may cost $5,000 to $6,000 per parking bay to retrofit on soft-story, tuck-under parking buildings.  Then the engineering plans will be $5,000.  Permits may be several thousand dollars more.  Property taxes may increase.  So … we need some help.

There are many elderly apartment owners who simply will not qualify for a conventional loan and do not have the income in a rent controlled apartment to underwrite the cost of the retro/seismic program.  As you will agree, when you do a substantial renovation on Real Property, you automatically trigger a potential increase in the property taxes.

The Rent Control formulas for Los Angeles, West Hollywood, Berkeley and Santa Monica do not account for Bonds, parcel taxes or property taxes.  Again, their formulas ignore those items and to that extent, they are borne by or the responsibility of the apartment owner, exclusively.

Based upon the foregoing, we ask that your office consider investigating the matter, taking a meeting and/or arranging for emergency relief.    Sincerely, Michael Millman, Attorney 

P.S.  The dirty little secret is that municipalities are happy to adopt earthquake retrofit programs; however they are not willing to allow the true costs to be passed through to the tenants. L.A. does allow 50% of the costs to be passed through, amortized over seven years with a cap of $38 per month; however, you can only get that arrangement after you’ve spent the money and then apply a huge bureaucratic process where the rent authority could deny your application.

 

Opposition – AB 1506 – Repeal Costa-Hawkins

(To Representative Chiu, California Assemblyperson)

Dear Sir:

You and I have met on several occasions.  You’re thoughtful, considerate and charming.  We’ve often discussed “eviction protocols” in your community.  It was a robust and thoughtful debate.  Thank you.

Now, you’ve attended many apartment association events.  So, I’d like you to consider the consequences of the repeal of Costa-Hawkins.

As you’re more than well aware, there are approximately 19,000 rental units in West Hollywood.  It’s estimated there are approximately 25,000 rental units in Santa Monica.  Most, if not all, of these rental units are owned by small families. These owners are senior citizens.  Many are retired on fixed incomes.  They depend entirely upon Social Security and the modest income from their apartment units.

West Hollywood and Santa Monica will soon adopt a “seismic retrofit program” similar to Los Angeles, San Francisco and other cities.  This will involve tuck-under, soft-story parking construction arrangements.  It may cost as much as $100,000 per unit and again … perhaps $10,000 to $12,000 per parking bay.  Your housing staff person can verify these amounts by discussing it with representatives from San Francisco.

San Francisco allowed a 100% pass-through to the tenants.  This will not be the case in West Hollywood and/or Santa Monica.  This will create a desperate financial hardship for owners.

Small Housing Providers

So, by taking away the protections afforded by Costa-Hawkins, you will literally destroy an opportunity for these small housing providers to obtain any type of conventional loan.  These housing providers will go out of business and will apply for Ellis Act protection.

You will single-handedly probably be responsible for destroying 30% or more of the housing in West Hollywood and Santa Monica.  If you remove housing, you only promote and increase homelessness and other problems.

Take some time.  Meet with representatives of the apartment associations, Realtors and the Building Trade Unions.  They will all tell you that this bill was not given proper consideration as to the possible adverse consequences.  New development will be destroyed.  Remember, under Costa-Hawkins, new development is exempt from rent control.

In Los Angeles, new tenants pay for water, sewage and trash.  They do so and this has been a substantial water conservation vehicle.  Under your law, that arrangement will be destroyed.  PLEASE OPPOSE AB-1506.  Sincerely, Michael Millman

 

[AOA: Please make a copy of these letters and send it to your California Assembly Representative and to Assemblyman Chiu at at 455 Golden Gate Avenue, Suite 14300, San Francisco, CA 94102.. Go to www.assembly.ca.gov/assemblymembers to find the person who represents your area.  Thank you for supporting the industry!]

Michael Millman is an Attorney and a Mar Vista activist and can be reached at (310) 477-1201.